DALLAS - A week after raising $3 billion to build one toll project, the North Texas Tollway Authority appeared ready to back away from taking on another, citing risks to its credit rating and bond covenants.

The NTTA board yesterday approved a "three-pronged approach" to determining the value of State Highway 161, a proposed toll project in the western suburbs of Dallas. The three options were: returning to the market valuation study with the Texas Department of Transportation; agreeing on the NTTA's take-it-or-leave-it valuation proposal of $548 million; or allowing the authority to pass on the project.

The proposal comes after the NTTA and TxDOT reached an impasse over the value of the project. NTTA executive director Jorge Figueredo listed several proposals that were rejected by TxDOT. That led to the two sides shifting the goal from a "market value" to a "negotiated value."

Under a new state law, a market value study must be conducted on toll projects before they are awarded to a private or public developer. The law also provides public operators such as the NTTA the right of first refusal or "primacy" on any toll projects in their region.

TxDOT set a deadline of April 16 to reach agreement on the market value of the project, a date that Figueredo called unnecessarily hasty. TxDOT also wants the NTTA to decide whether to accept the project, but the authority cannot do so until later in the year under provisions for its recent bond issue for another project, State Highway 121.

The NTTA must be sure that taking on SH 161 will not hurt its credit rating, which slipped after it agreed to issue $3.3 billion for State Highway 121, a 26-mile tollway that arcs across the northern suburbs of Dallas.

SH 161 in the western suburbs will funnel traffic from SH 121 and other NTTA tollways toward the new Dallas Cowboys stadium under construction in Arlington. TxDOT and the Regional Transportation Council want the project partially completed in time for the opening of the stadium in 2009.

Figueredo said the concession model for building SH 161 was not the best way to develop the project. Under the concession process, the NTTA bids for the project as if the authority were a private developer, offering an upfront payment to the RTC for the rights. In the case of SH 161, the NTTA is offering $298 million in upfront payments. If the agency passes on the project, it can be offered to a private developer.

However, TxDOT has indicated that if the NTTA passes on the project, SH 161 project will be built as a fuel-tax financed highway that will not be tolled.

Figuredo said the NTTA and TxDOT had agreed on about 200 issues in the valuation process, but disagreed on seven troublesome issues.

Construction of SH 161 is already underway on phases 1, 2 and 3. The NTTA is seeking to set a value for phase 4 that would include the cost of construction and reimbursement of the state and RTC for the costs of 1-3. If the authority were awarded the contract, the authority would operate all four phases as one toll road.

The NTTA had to pay the RTC $3.3 billion for the right to build SH 121, an amount that tripled the authority's indebtedness and brought a downgrade from all three ratings agencies. The authority dismissed Fitch Ratings from its most recent bond issue after Fitch lowered its existing $1.3 billion of debt from A-minus to BBB-plus. The NTTA had counted on staying in the single-A category in financing SH 121.

In discussing the risks of SH 161, Figueredo also cited turmoil in the municipal bond and financial markets. With the collapse of the auction-rate securities, issuers have lost some flexibility on variable-rate debt.


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